Abstract
This paper critiques many of the leading popular and philosophical arguments purporting to show employers have a duty to pay a living wage. Some of these arguments fail on their own terms. Some are not really about a living wage. The best of them fail to show employers per se owe a living wage; at best, they should that governments should supplement market incomes though a negative income tax or some other redistributive device.
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Notes
“The current federal minimum wage is starvation pay and must become a living wage.” http://berniesanders.com/issues/a-living-wage/.
Calculations according to http://www.givingwhatwecan.org/why-give/how-rich-am-I, and Milanovic (2005).
GlobalRichList is an organization trying to induce people in the developed world to donate more to charity after realizing how rich they are. However, while GlobalRichList has an agenda, the rely on publically available and well-used statistics, such as the World Bank’s 2008 income data. (http://www.globalrichlist.com/#na).
http://www.givingwhatwecan.org/get-involved/how-rich-am-i/?country=USA&income=30000&adults=1&children=0. Note that while GivingWhatWeCan also has an agenda, they use data from Milanovic (2005).
http://www.cia.gov/library/publications/the-world-factbook/geos/cu.html. Of course, if people live together and so share some expenses, $16,000 per head gets them closer to a good standard of living.
I can allow that to some degree, what one needs to live well is socially constructed. Perhaps in some countries, a person can’t be seen in public without a fine coat, but in others, one can wear jean shorts. In that case, it might well be a living wage really is lower in one place than another in a way not captured by purchasing price parity adjustments. But this is a minor adjustment which won’t undermine the argument here.
Egalitarians might hold that there is a duty to equalize incomes even if some workers produce far more than others. Feminists might hold there is a duty to pay stay-at-home parents an income, even though their labor is not placed on the market and so does not command a price. Libertarians might hold that if a worker and an employer voluntarily agree to a wage, then the wage is just, regardless of whether it is higher or lower than the worker’s MP.
For an excellent summary of this literature, see Cowen (2017).
For instance, many of Anderson (2017)’s complaints about employer’s mistreatment of employees presumes a monopsonistic labor market.
Wilkinson (2004) also critiques exploitation and freedom-based arguments for and against the minimum wage; he argues in the end that the only important considerations for or against the legal minimum wage are its effects on jobs and income. The minimum wage issue is closely related, but the consequentialist issues are somewhat different, as a legal mandate might have different consequences than a firm deciding unilaterally to pay an above-market wage. His argument against the minimum wage could also be used against the living wage. However, my arguments here differ in that I take less controversial stances than he does—while Wilkinson argues that worker freedom and autonomy are not a consideration, I remain agnostic on those matters.
In a follow-up article, Arnold and Bowie (2007), they once again respond to an economic critique of living wages, but do not provide a substantive positive argument about why employers must pay a living wage.
Zwolinski (2007, 708–710), makes this point in response to Alan Wertheimer and Ruth Sample. Wertheimer and Sample argue that people who interact with each other acquire greater duties to one another than people who do not interact with one another. However, Zwolinski points out, even if we grant that, it takes more work to show that this proves employers owe employees a certain wage.
For instance, imagine the government announces it will pay everyone $75,000 in welfare benefits if they take a job, any full-time job, at any price. Suppose the market in certain jobs is also quite uncompetitive. In this case, we might imagine workers in those jobs will take accept tiny salaries from employers, where their wages are far less than their MPs, and so the government would inadvertently subsidize the employing firms. On the other hand, if the government simply provides a scaled negative income tax and the market is fairly competitive, then the firms should not be able to capture a subsidy.
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Brennan, J. Should Employers Pay a Living Wage?. J Bus Ethics 157, 15–26 (2019). https://doi.org/10.1007/s10551-017-3724-y
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DOI: https://doi.org/10.1007/s10551-017-3724-y